🛑 Major Clarity from AAR: Only the Supplier Can File for GST Advance Ruling

The Authority for Advance Ruling (AAR) recently delivered a significant ruling that reinforces a fundamental principle of the Goods and Services Tax (GST) framework: only the supplier of goods or services can file an application for an advance ruling. This clarification directly impacts businesses seeking clarity on their GST liabilities when they are the recipient of a service or goods.

This detailed look explores the specific case, the legal provisions, and the far-reaching implications of the AAR's decision.

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1. The Case in Focus: M/s Convenieo Sales Private Limited

The matter came before the Uttar Pradesh Authority for Advance Ruling (UP-AAR) involving the applicant, M/s Convenieo Sales Private Limited.

The Transaction

The applicant was allotted an institutional plot by the Yamuna Expressway Industrial Development Authority (YEIDA) under its Institutional Plot Scheme. The purpose of the allotment was to establish a Nursery School. The allotment involved securing a long-term lease of ninety years for the plot, requiring the applicant to pay an upfront premium amount.

The Question to the AAR

M/s Convenieo Sales Private Limited, as the recipient of the long-term lease service, sought an advance ruling on a very specific and crucial question:

"Whether the upfront amount payable by the applicant (as lease premium) for obtaining a long-term lease... for the development of educational infrastructure... is exempt from the payment of GST under Entry No. 41 of Notification No. 12/2017-CT (Rate)...?"

The core of the issue was whether the substantial lump-sum lease premium, paid by the receiver, fell under a specific exemption notification.

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2. The Legal Labyrinth: Decoding Section 95 of the CGST Act

The Uttar Pradesh AAR, before addressing the merit of the GST exemption, first examined the eligibility of the applicant to even file the request. Their scrutiny focused on Section 95(c) of the Central Goods and Services Tax (CGST) Act, 2017, which defines an ‘applicant’ in the context of an advance ruling.

The AAR's Interpretation

The Authority observed that the statutory provisions governing Advance Rulings implicitly and explicitly limit the right to apply for a ruling to the person who is seeking a determination of their own liability under the Act.

Ø  An Advance Ruling application is fundamentally designed for a person who is required to pay or collect GST to get clarity before undertaking a prospective activity.

Ø  In the present case, M/s Convenieo Sales Private Limited was the receiver or recipient of the service (the long-term lease).

Ø  The actual supplier of the service, who would be liable to charge, collect, and deposit GST (if applicable) on the lease premium, was the Yamuna Expressway Industrial Development Authority (YEIDA).

Since the applicant was the recipient, and not the party whose GST liability was in question concerning the supply, the AAR concluded that the application was inadmissible.

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3. The AAR's Verdict and Broader Implications

The UP-AAR's decision in the case of M/s Convenieo Sales Private Limited was definitive: the application was rejected on the grounds of lack of jurisdiction and eligibility.

The Key Principle Established

This ruling serves as a vital reminder to all taxpayers and tax practitioners about the scope and objective of the AAR mechanism:

Applicant Type	Eligibility to File AAR Application	Reasoning
Supplier of Goods/Services	✅ Eligible	They are the party whose GST liability (to charge, collect, and deposit tax) is in question.
Receiver of Goods/Services	❌ Not Eligible	They are simply the recipient and the tax payment is a matter between them and the supplier, not a question of their own supply liability.

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Practical Implications for Businesses

1. Strategic Filing: If a recipient of goods or services wants to confirm the GST treatment (e.g., exemption status) of a supply, they must coordinate with their supplier and ensure that the supplier files the Advance Ruling application.
2. Focus on Liability: The AAR mechanism is a tool for the taxable person (usually the supplier) to determine their GST implications on a proposed supply to avoid future disputes, not a tool for a recipient to pre-confirm Input Tax Credit (ITC) or the final price of the product/service.

In conclusion, while the applicant sought clarity on an important exemption, the AAR has made it unequivocally clear that the eligibility criterion under Section 95 is a gatekeeper to the Advance Ruling process, ensuring that only the party responsible for the outward supply and its tax liability can approach the authority.